Housekeeping: Have a good Friday and a great weekend.
Market Rundown:
Good Morning. The dollar is down 17 points. Bonds are slightly softer. Stocks are mixed with the Nasdaq down some 20 bps. Gold is down $2 in the”teens” again. Silver is up a nickel at $20.70. Oil is up $1.02. Nt Gas is down 15 cents. Crypto is flat to up small. Grains are up some with Wheat the strongest up 1.3%. Today is NFP/ Unemployment day.
Blackrock Bails
Today we read Blackrock’s Quarterly preview, a 26 page chartbook that is easy on the eyes and very informative. In it among other things, they say: That means inflation staying somewhat higher for longer – but is a better outcome, in our view, if inflation expectations stay anchored.
They may seem late to the party in their assessment of the current situation. but know that when an incumbent like they are jumps on board a concept (low inflation isn’t happening) then the Fed is not far behind of moving the goalposts. Expect more inflation creep talk from the Fed soon once they realize they cannot break inflation fast enough without crashing the economy.
Blackrock’s chartbook is a very good overview, if a rare honest statement. Could it be they need a bigger bailout post the UK debacle?
EXCERPTS:
Goldman on Today’s Unemployment:
“We believe labor shortages are easing and wage pressures have peaked…”
We estimate nonfarm payrolls rose by 200k in September (mom sa), 50k below consensus and a slowdown from the +315k pace in August. The loss of the youth summer workforce represents a headwind for September payrolls following strong summer employment gains for that segment.
We estimate the unemployment rate was unchanged at 3.7% in September—in line with consensus—reflecting flat-to-up labor force participation and a rise in household employment.
Basically a drop as summer jobs end. Unemployment remains steady as more people participate to counterbalance the decreasing jobs available. In short, there are more people looking for fewer jobs again.
Blackrock on Inflation
Even Blackrock is stating the Fed must either raise its inflationary target or get ready to crash the economy. Their chartbook is a very good overview, if a rare honest statement. Could it be they need a bigger bailout?
We think central banks will eventually confront the trade-off in its entirety. Once they see the cost to growth and jobs materializing, they’ll likely choose to take longer to bring inflation to target and give the economy a chance to rebalance as production capacity slowly recovers.
That means inflation staying somewhat higher for longer – but is a better outcome, in our view, if inflation expectations stay anchored.
Nice way of saying: Raise your target or crash the economy boys.
Real or imagined, the Fed’s 2% target is not going to happen. It's a Fairy tale. What is more, once they admit it ( they can't right now) stocks will explode blowing the cover on their goal of keeping asset prices down as incentive to get people to work again. It's all a joke. More on this another time. But let’s put it this way: there are economic indicators the Fed cannot suppress1 telling you it's all a lie created to obfuscate and placate. It is a house of cards being taken down in controlled demolition.
CONCLUSION:
Either inflation normalizes at a significantly higher baseline, unemployment normalizes as being “full employment” closer to 5 or 6%, or we get a torrid stagflationary recession worse3 than the 1970s as the market resets itself on the backs of its citizens while leaders continue to delude themselves that all is well. The Fed is lying either to themselves or to us.
MS on Crypto
There are 180+ active crypto ETF/ETP and trust products. Half have launched since the bitcoin bear market started, despite total assets falling 70% from $84 to $24bn. WisdomTree remains a front-footed leader in digital assets amid growing acceptance by the traditional asset managers.
